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  • cynical_trader cynical_trader Apr 17, 2012 9:38 PM Flag

    ISRG conference call - FireFly

    In imaging, our Firefly Fluorescence Imaging system is now being used regularly to image kidney vasculature during da Vinci Partial Nephrectomy. Surgeons are also exploring the use of Firefly in visualizing blood flow in da Vinci colorectal procedures.

    First quarter instrument and accessory revenue was $208 million, up 32% compared with $157 million for the first quarter of 2011 and up 6% compared with $196 million in the fourth quarter of 2011. Year-over-year, instrument and accessory growth was driven by procedure growth of 29% and initial purchases of recently launched products, including Single-Site starter kits and our Firefly product. Note that the first quarter of 2012 included one more surgical day than the first quarter of 2011 due to leap year.

    Instrument and accessory growth relative to the first quarter of 2011 was primarily driven by procedure growth in sales of our Single-Site starter kits, partially offset by lower first quarter stocking orders associated with seasonally lower first quarter system sales. Instrument and accessory revenue realized per procedure, including initial stocking orders of $1,985 per procedure, was higher than the first quarter of 2011 by $50 and $10 higher than the fourth quarter of 2011. Over time, we expect instruments and accessories per procedure to decline slowly, given that initial stocking orders have a lower impact on a larger installed base. This natural decline has been more than offset in recent quarters by the positive impact of our new instrument and accessory products, specifically, Single-Site, Firefly and our thoracic lung kit. Instrument and accessory revenue per procedure will fluctuate based on the rate of adoption of newer products as well as product and procedure mix.

    Our first quarter average selling price per system, including all da Vinci models, was $1.47 million, an increase from the $1.38 million realized in the fourth quarter of 2011 and the same as the fourth quarter. ASPs include simulators and systems configured with Firefly but exclude upgrades. The increase in average sales price relative to the first quarter of 2011 reflects a higher proportion of dual consoles, a higher number of systems shipped with surgical simulators and Firefly partially offset by an increased proportion of trade-ins. We sold 25 dual console systems in the first quarter of 2012 compared to 16 in the first quarter of 2011 and 29 in the fourth quarter of 2011.

    Recent new product launches are all proceeding well. The attachment rate for both the da Vinci simulator and our Firefly product remained high, which is helping to buoy da Vinci system ASPs. The initial customer response to our da Vinci Single-Site product line has been very positive, with many centers up and running and several more scheduled for training.

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    • Q&A...


      And our next question comes from the line of David Lewis with Morgan Stanley.

      David R. Lewis - Morgan Stanley, Research Division

      A couple of quick questions. I want to try to, maybe Aleks or Gary, to rectify the revenue per procedure numbers. Obviously, it's stronger than we would have thought, and you've talked about general surgery being a contributor to the incremental growth. So I'm trying to figure out, if general surgery comes on, revenue per procedure should trend down slightly, but in this quarter it trended up and that they contribute to growth. So can you just give us some more granularity on your revenue per procedure going up even though general surgery did contribute to positive growth acceleration?

      Marshall L. Mohr

      Yes, so when we're selling SILS kits or our single-incision product...

      Gary S. Guthart

      Or Single-Sites.

      Marshall L. Mohr

      Yes, Single-Site product. We're -- they're buying it as a kit and they may not have done any surgeries yet, right? And so that's really what is helping increase the revenue per procedure, that, as well as Firefly, as well as thoracic kits. So they're buying instruments and accessories in advance of doing the procedures. Now over time, they'll be doing the procedures and then that will balance out. Long term, I think your question is, is the price that they are paying for single-incision products less than what we're charging for our normal -- our multiple-incision products? And the answer is yes.

      David R. Lewis - Morgan Stanley, Research Division

      Okay. So it sounds like, even though the ancillary products, like Firefly, are doing obviously well, you still believe, over time, this trend is going to annualize down.

      Aleks Cukic

      Yes, yes.

      Gary S. Guthart

      Over time. It's hard to exactly predict because the mix of new products and the mix of procedures is hard to forecast precisely. And so some of them carried up and some of them push it down and so you have those 2 trends working in opposition.

      • 1 Reply to cynical_trader
      • I've listened to the last few calls and there is no doubt that the frequency of references and questions about Firefly are increasing. They mentioned that the percentage of new systems purchased with the Firefly option is at a high rate, but unless I missed it, I did not hear much about older systems being modified/retrofitted to include Firefly? Either way, with ISRG placing 100+ systems per quarter and LifeCell placing 100+ systems per quarter, the rate of growth in procedures/kit sales will begin to accelerate rapidly toward the end of this year.

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